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Fresh From the Bench: Precedential Patent Cases From the Federal Circuit

June 30, 2017

Overview

InNantkwest, the Circuit reverses a district court decision that had rejected the PTO’s position that applicants who appeal a district court ruling must pay the PTO’s legal bills regardless of who wins. InStanford v. Chinese University, the panel reverses an interference ruling, noting that Stanford patents to fetal DNA testing methods were improperly determined to be invalid because the Board relied on evidence that described sequencing systems that were different from those disclosed and claimed in the patent.

Thanks to my colleague Martin Garthwaite for his help with this week’s report.

Pete

Nantkwest, Inc. v. Matal,Fed. Cir. Case 2016-1794 (June 23, 2017)

35 U.S.C. § 145 provides that a patent applicant dissatisfied with a decision of the PTAB may appeal directly to the district court for the Eastern District of Virginia in lieu of immediate appeal to the Federal Circuit. The statute provides that the applicant must pay “all of the expenses of the proceeding,” regardless of the outcome.

Nantkwest appealed to the district court under § 145 and lost. The court awarded the PTO $33,000 in witness fees, but denied its request for $78,000 in attorney and paralegal fees (calculated as a pro-rata portion of the salaries of PTO staff involved in the matter). The court found that the “American Rule” requires that litigants pay their own attorneys’ fees unless a statute or contract provides otherwise. The court found that the “all expenses” provision of § 145 was not “sufficiently specific nor explicit enough for the authorization of attorneys’ fees” under the American Rule.

The Circuit reverses the decision and awards the PTO both witness fees and the requested attorney and paralegal fees. The panel reviewed application of the American Rule to the “all expenses” provision of § 145 and decides that this includes attorney fees. In its opinion the panel reviews definitions of “cost,” “expense,” and “attorney fee,” and use of these terms in other statutes and by the Supreme Court. The panel notes that Nantkwest had not provided contrary Supreme Court authority that the term “expenses” categorically excludes attorneys’ fees and found that “Congress… meant to award attorneys’ fees under the broader term ‘expenses’ within the context of” proceedings under § 145.

The Circuit reverses an interference ruling by the Board, noting that Stanford patents to fetal DNA testing methods were improperly determined to be invalid. Specifically, the Board had considered evidence submitted by an expert witness that was not part of the specification of the patent at issue and therefore was inappropriately considered.

This matter came before the Circuit in an appeal of a ruling in an interference proceeding filed by Chinese University, which contended that its personnel were the first inventors. This issue is, of course, a defense for pre-AIA-filed patent applications.

In its decision the panel first rejects Stanford’s argument that this appeal could have been heard in district court. Specifically, the Circuit refuses to reconsider the decision it made in 2015 in itsBiogen v. Japanese Foundationholding that the AIA abolished the right of parties to bring civil actions in district court under 35 U.S.C. § 146 in appealing decisions in interferences declared on or after September 16, 2012.

Second, the panel rejects Stanford’s argument that, even if it cannot return to district court to complete the proceedings begun there, the Circuit should take into consideration the record developed in that proceeding. The panel rules that since the district court action should never have been initiated, it would be improper to consider evidence presented in that action.

Finally as to the merits, the panel rules that the Board improperly rejected Stanford’s claims for lack of written description. The parties disputed whether the Board correctly determined that the ’018 patent does not disclose the random massively parallel sequencing of nucleic acid sequences recited in the later-added claims such that a person of skill in the art would have concluded that the inventors were in possession of the method claimed. The Board concluded that Chinese University’s expert Dr. Gabriel supported her testimony with published references regarding targeted massively parallel sequencing, and, based on this, concluded that the ’018 patent lacked sufficient written support.

The panel disagrees, holding that both Dr. Gabriel and the Board failed to cite any evidence of targeted or random sequencing on the Illumina platform prior to the filing date. Although Dr. Gabriel did point to two post-dated references, these references post-date the 2007 priority date, and the other references discuss a platform not referenced in the ’018 patent.

In its remand, the panel rules that the Board may not use post-dated references as a source for “later knowledge about later art-related facts . . . which did not exist on the filing date.” The Board also should examine whether a person of ordinary skill would have understood that the ’018 patent’s specification disclosed random MPS sequencing, as opposed to whether the specification did not preclude targeted MPS sequencing.